Mortgage Market Reopens to Risky Borrowers • Hacker News Board

Re: Mortgage Market Reopens to Risky Borrowers

#121

Post by aznpwnzor » Thu, Aug 22, 2019, 2:16 AM UTC

danieltillett wrote: post #72

aznpwnzor wrote: post #51

Earlier quoted context omitted.

imo part of the problem is our liberal arts influenced college education system. because college has moved away from being a luxury of broadly educating landed gentry to being a signaling of "i can be employed and responsible" the train a generalist approach doesn't really work. To be specific, there are two types of journalists/writers 1. domain experts that are good writers/communicators 2. good writers/communicato…

What about the third and fourth types - paid shills/hacks without a clue and activists with an axe to grind.

i think those reduce to the first two types. paid shills is subjective and can be a domain expert. some even think krugman is a neoliberalist shill.

many hacks are also the first type. see degrasse tyson, jared diamond, malcolm gladwell, arguably pinker. very little substantive base, but great storytellers

activists reduces to the second type imo. if you have domain expertise, you usually hold a more nuanced view and don't come off as an activist even if you are very active. those with a preconceived notion are typically not a domain expert and just use their superior communication ability to prove their axe

Re: Mortgage Market Reopens to Risky Borrowers

#122

Post by crazyivan2008 » Thu, Aug 22, 2019, 2:27 AM UTC

luxuryballs wrote: post #89

Man I wish someone would give me a “risky deal” I am totally good for it but I just don’t have a decent enough down payment. Paying $2000/mo for rent sucks.

I didn't have the credit score to qualify for a mortgage 5 years ago, and the house we were renting was being sold. We found a private lender and paid $150k for a nice little home in the Austin suburbs - $20k down and 7.9%.. I know, it's a crazy high rate but I'm so grateful that the guy trusted us. My credit score is now > 760 and we're closing this week on a 10-year refinance at 3.5%.

Re: Mortgage Market Reopens to Risky Borrowers

#123

Post by sjg007 » Thu, Aug 22, 2019, 2:44 AM UTC

apo wrote: post #2

> Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007, according to Inside Mortgage Finance. There was $1.9 billion worth of subprime mortgage bonds in the second quarter. Statements like this are hard to evaluate without knowing the denominator:…

Less than 690 is subprime? I would’ve thought closer to 640...

Re: Mortgage Market Reopens to Risky Borrowers

#124

Post by vagab0nd » Thu, Aug 22, 2019, 3:28 AM UTC

We were planning to start (our first) small business, which would require locking in some capital. I'm worried about the future of the economy, and have been thinking about putting it off. I know a lot of people say don't time the market, but I feel this is a bit different from timing the market in the context of investing. What should I do?

Re: Mortgage Market Reopens to Risky Borrowers

#125

Post by mtanski » Thu, Aug 22, 2019, 3:31 AM UTC

rockinghigh wrote: post #91

dawsmik wrote: post #9

Earlier quoted context omitted.

The FICO score is only one consideration. The biggest problem with the loans in 2007 was lack of verification of income and buyers qualifying on a mortgage amount that would eventually go up. A 650 FICO borrower with a good job, downpayment and an affordable monthly payment is a pretty good risk.

My assumption is that someone with a score less than 700 probably had late payments on some of their debt.

FICO score for mortgages is not the same score as the modern FIDO score. The mortgage score is often what's called FICO v2 and the modern one is something like v10. They've even branded their different old versions as Insurance score, Auto score, Mortgage score and those industries kind of stick with it.

To illustrate why this matters. My modern FICO score is something like high 700s, low 800s (depending on credit data vendor). My V2 score is like 690.

How did that happen? Turns out when I moved out from my last house (5 years ago) and canceled my internet with Time Warner they failed to charge me $31 which was always set to auto-play. I actually settled 5 months after the move when TW sent me to collections. The shady collection agency promised to remove it off the record if I paid (they didn't). Instead, it shows up as a 5 year old, $31 late payment, paid in full.

How did I find out, while looking to refinance at these current rates. I'm getting this sorted out now. Both TransUnion and Experian got it fixed in a few business day.... fucking Equifax cannot get their shit together 3 weeks later.

For me it's a hassle, annoyance and wasted time. But as you can see it can impact real people and the score methodology is pretty dumb.

It's insane that a 5 year old, paid in full debt for $31, that's not even my fault drags my credit score down ~100 points (that's what it is once corrected) and prevents from getting a refi. Doesn't matter that all my other credit cards are always paid in full, no late payments on mortgage, car, insurance ... which all add up to several magnitudes more then $31 over the 5 years.

Re: Mortgage Market Reopens to Risky Borrowers

#126

Post by thehappypm » Thu, Aug 22, 2019, 3:37 AM UTC

vagab0nd wrote: post #124

We were planning to start (our first) small business, which would require locking in some capital. I'm worried about the future of the economy, and have been thinking about putting it off. I know a lot of people say don't time the market, but I feel this is a bit different from timing the market in the context of investing. What should I do?

There's always a million reasons not to do something. Vague economic fears should rank low on the list.

Re: Mortgage Market Reopens to Risky Borrowers

#127

Post by sershe » Thu, Aug 22, 2019, 4:09 AM UTC

gnopgnip wrote: post #110

opportune wrote: post #22

Is anybody else making the supposedly foolish decision to time the housing market? I am financially ready to purchase my first home, currently living in the bay area, but I think right now just looks like a bad time. - A lot of housing price growth is seemingly "priced in" since rents for condos/apartments significantly lower than total monthly ownerships costs (mortgage+hoa+insurance+taxes+etc.), even with 20% down.…

Would you have come to the same conclusion to wait 2 years ago, or 4 years ago, or 6 years ago? At what point will you decide to stop waiting and buy?

The answer is actually "probably not". I was looking at Bay Area housing ~4-5 years ago, and while I had a gut feeling of "how can it possibly go any higher?!!", when I did some research (similiar to the parent) it made sense to buy. I ended up not buying because I realized I simply don't want to live in Bay Area period, even if it was as cheap as Austin was back then :) Last year I did the analysis again in Seattle, and it looked like it may be topping out. I figured I want to buy anyway and did, and it topped out one month later. It was dumb to buy, I could have had my house for cheaper a year later.

Re: Mortgage Market Reopens to Risky Borrowers

#128

Post by sparky_z » Thu, Aug 22, 2019, 4:12 AM UTC

grenoire wrote: post #114

bakuninsbart wrote: post #50

Earlier quoted context omitted.

How about The Economist? I feel like they are doing a good job at a middle path.

There is genuine critique about the inexperienced writers of The Economist ( https://www.theatlantic.com/technology/archive/1991/10/-quot... ) —however, still much better than any other print media, it seems.

That's from almost 30 years ago. And it's not like there's any hard data, mostly just gossip from a single source.

Now that many of the writers aren't anonymous anymore, is there anybody still saying that it's all young 20-somethings?

Re: Mortgage Market Reopens to Risky Borrowers

#129

Post by erikpukinskis » Thu, Aug 22, 2019, 5:28 AM UTC

opportune wrote: post #22

Is anybody else making the supposedly foolish decision to time the housing market? I am financially ready to purchase my first home, currently living in the bay area, but I think right now just looks like a bad time. - A lot of housing price growth is seemingly "priced in" since rents for condos/apartments significantly lower than total monthly ownerships costs (mortgage+hoa+insurance+taxes+etc.), even with 20% down.…

Also, consider the possibility that a company like Facebook moves its primary office to VR in ~10 years.

Not putting a probability on that, but we’ve never seen a teleconferencing platform with eye contact and body language before. I have no idea if that’s the limiting factor, but it seems at least plausible. FB, Google, and Apple will almost certainly all be selling $500 devices that can do those two things inside of 5 years.

Is that enough to disrupt physical offices? I don’t know.

But the probability is not 0. Personally I doubt ‘p(by 2030 one tech giant allows most workers to choose to work in VR)’ is I’m going to price that into any Bay Area property valuation I make. How many people are only here because their office demands it?

Re: Mortgage Market Reopens to Risky Borrowers

#130

Post by d--b » Thu, Aug 22, 2019, 6:28 AM UTC

opportune wrote: post #22

Is anybody else making the supposedly foolish decision to time the housing market? I am financially ready to purchase my first home, currently living in the bay area, but I think right now just looks like a bad time. - A lot of housing price growth is seemingly "priced in" since rents for condos/apartments significantly lower than total monthly ownerships costs (mortgage+hoa+insurance+taxes+etc.), even with 20% down.…

What’s important to realize is that as a first time buyer, your goal is not to make an investment, but it’s to change your numéraire.

Basically, once you own your house you are no longer at risk with regards to the overall housing market. It may crash, and yes you will lose some dollar-value, but so will other houses, so you will still be able to sell/buy another comparable house.

If you don’t buy however, You may buy a better home in a few years (if there is a crash), but if the price continues to go up, you may need more money to buy the house you could buy today...